Office of Communications Bill [Lords]
4:30 pm
Dr Kim Howells (Parliamentary Under-Secretary, Department for Culture, Media & Sport; Pontypridd, Labour)
I, too, welcome you to the Chair, Mr. Stevenson.
Perhaps it would be convenient if I explain to the Committee how the Government envisage the funding of Ofcom during its initial stages. The general approach for sectoral regulators is that the cost should be borne by the sector concerned. That is
how things have worked until now and how we envisage they will work in the future. In other words, regulation is part of the cost of doing business, and anyone with experience of working in those sectors knows that that is how existing regimes are financed.
We will set out powers to charge fees in the main communications Bill. For the anoraks among us, only half the cost of the Broadcasting Standards Commission, which is financed in a slightly different way, is involved. Ofcom will need to consider the best way to levy the regulated part of the communications sector, and how to avoid as far as possible cross-subsidy between one part and another, so that the burden on individual businesses is fair. I expect the Ofcom board, once appointed, to address that issue and to present its proposals publicly. In general, there will be little or no need for grants once Ofcom is regulating.
During the preparatory stage, however, Ofcom will have no statutory income. The Government believe that the extra costs of creating Ofcom should be borne by the sector. It makes more sense for Ofcom to be financed by businesses that are in the sector when the new regime comes into force than by those that are in it today. We envisage that all, or almost all, of the costs of transition will be financed by a loan to Ofcom from the Secretary of State. That loan will be paid back by Ofcom out of the fee income that it will start to receive once it moves into the regulatory stage.